Real Life Marketing Lesson: Are You Charging Clients Like American Airlines?

Not surprisingly, many American Airlines customers expressed significant outrage over the airline’s recently announced plans to charge passengers additional fees for checking bags and for certain services related to reservations. Indeed, the news may have irked you as well. But before you start venting, ask yourself whether your billing policies “nickel and dime” your clients just as the airlines are doing to passengers.

For example, do you charge your clients when you call them to get additional information that you need for the case that you neglected to request? Do you bill them for correcting an error that you made on their bill? Does your $750 bill also tack on a .44 cents charge for postage and a $43 LEXIS charge? If those are some of your policies, you might want to re-examine them before complaining about American Airlines.

The bottom line is that most people don’t like to feel as if you’re squeezing money out of them every time they turn around. If American Airlines had simply raised fares an extra $50 to reflect increased gas prices, I doubt that most people would have raised a stink. But what bugs them are little charges here and there that should simply be rolled into the overall cost of a ticket.

For that reason, clients prefer flat fees, where they can pay one price and there’s no uncertainty about added charges. But even if flat fee billing isn’t feasible, consider rolling incidental costs like legal research services, phone, fax, postage and photocopying into your overhead and simply charging a higher hourly rate to cover these fees. Clients will balk less about your rates when they perceive them as encompassing full service rather than pay as you go.

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Carolyn,
When I practiced I NEVER nickel and dimed clients. But I would make it a habit of indicating I did work on the bill with a large N/C (no charge) next to it.
First, it made them aware I did not nickel and dime them (because I did not want them to be afraid to contact me w/information I may have forgot to ask or simply something they remembered) and:
Second, it gave them significant pause before they questioned the bill (which only happened once…and fees had to be argued in court and the court found my charges more than reasonable).
I never failed to profit…I just eliminated headaches, did not give the impression of squeezing the client and it positively impacted the attorney/client relationship.

Susan Cartier Liebel

Carolyn,
When I practiced I NEVER nickel and dimed clients. But I would make it a habit of indicating I did work on the bill with a large N/C (no charge) next to it.
First, it made them aware I did not nickel and dime them (because I did not want them to be afraid to contact me w/information I may have forgot to ask or simply something they remembered) and:
Second, it gave them significant pause before they questioned the bill (which only happened once…and fees had to be argued in court and the court found my charges more than reasonable).
I never failed to profit…I just eliminated headaches, did not give the impression of squeezing the client and it positively impacted the attorney/client relationship.

On the other hand, could one consider this policy an “unbundling” of sorts? The airline has agreed to fly you and one carry-on bag; did it agree to also fly your entire closet of clothes? If they are charging for flying baggage, they are not charging others who can fly “lighter” and thus consume less resources ….
Just a thought to consider, before we lump them into the “nickel and dime” category. Just because it’s different doesn’t make it wrong.

On the other hand, could one consider this policy an “unbundling” of sorts? The airline has agreed to fly you and one carry-on bag; did it agree to also fly your entire closet of clothes? If they are charging for flying baggage, they are not charging others who can fly “lighter” and thus consume less resources ….
Just a thought to consider, before we lump them into the “nickel and dime” category. Just because it’s different doesn’t make it wrong.

Carolyn – This is a clever post. Having a long history with the airlines, I just shook my head when I heard this. But, I really had to chuckle when I read your post. I JUST received a bill yesterday where a service provider added a 10% service fee. I had never seen this before, so I asked them what it was. They said it was for faxing, fedex, etc. Considering that we do almost everything by email, I couldn’t help but feel abused. For all the private practice lawyers out there, take it from a client (and soon American Airlines): Don’t try to look inexpensive and then nickel and dime. Pick your price and give the best service you can for that price. Your clients will love you for it. My 2 cents.
Mark Britton
CEO, Avvohttp://www.avvo.com

Carolyn – This is a clever post. Having a long history with the airlines, I just shook my head when I heard this. But, I really had to chuckle when I read your post. I JUST received a bill yesterday where a service provider added a 10% service fee. I had never seen this before, so I asked them what it was. They said it was for faxing, fedex, etc. Considering that we do almost everything by email, I couldn’t help but feel abused. For all the private practice lawyers out there, take it from a client (and soon American Airlines): Don’t try to look inexpensive and then nickel and dime. Pick your price and give the best service you can for that price. Your clients will love you for it. My 2 cents.
Mark Britton
CEO, Avvohttp://www.avvo.com

David Fuller

I agree wholeheartedly. It seems that fees create a lot of nervousness for both practitioners and clients. The flat fee eliminates a lot of those issues. My question, however, is if you are practicing in a jurisdiction or practice area that requires you to break out fees – i.e. client pays the filing fee in bankruptcy – how best to communicate that although the fee is broken out between services and cost of litigation, it is nonetheless a flat fee and they aren’t being nickeled and dimed.

David Fuller

I agree wholeheartedly. It seems that fees create a lot of nervousness for both practitioners and clients. The flat fee eliminates a lot of those issues. My question, however, is if you are practicing in a jurisdiction or practice area that requires you to break out fees – i.e. client pays the filing fee in bankruptcy – how best to communicate that although the fee is broken out between services and cost of litigation, it is nonetheless a flat fee and they aren’t being nickeled and dimed.